So what are we seeing in the market this month? It's the question that's always asked, right!? Especially as things continue to shift. But as we go through this I think it's more important to know what all of the data is actually showing. If you follow me on social media you probably already know what my overall thoughts are. Most headlines we read right now are still trying to induce fear, but.......most often they're reporting on what's already happened, not what's happening or going to happen and it's almost always on a country wide scale.
The greater Hamilton housing market does appear to be in freefall though right!? With prices dropping month-over-month and fewer and fewer buyers willing to take the plunge. Does this mean it’s a good time or a bad time to make a move, to buy, to sell, to invest.
Or the other question is, what are there risks involved? Let’s take a closer look.
Remember that while average sale prices have decreased overall, some neighbourhoods have seen more significant drops and some less.
So if you’re thinking of making a move, it’s really, really important to do your research first. But I guess that’s why you’re reading this blog, right???
Earlier this week, a friend of mine in Toronto asked:
“Any thoughts on the Star article today about house values in Toronto dropping 30% and a repeat of the 90s?”
The one thing to understand, like I alluded to, is a lot of these articles are referencing drops from the top. So February and March 2022. Not a further 30% from today.
Still, 30% is a lot, there's no sugarcoating that. Although that decline is not across the board. But, I’ll be honest, I was wrong earlier this year when I predicted property values in urban markets to take a much smaller overall 15 to maybe 20% hit, more in line with what happened in 2008.
My answer to my friend about the article though and about real estate closer to home here in the Hamilton, Burlington, Niagara and Haldimand region was....
"Some areas have already dropped 30%, some are flat, and some in between.
The rest of 2022 will be pretty slow for sales, I'm pretty confident but as long as listing supply doesn’t pile on (which it isn’t), we’ll likely ride out the storm and bounce back mid to late into 2023, heading into 2024.
Do I think home prices will drop a further 30%? Absolutely not! Lots of things are holding pretty strong and seem like they should continue to. Some houses have slipped significantly, but it really depends on the area and type of property in that area. It's really about looking at micro markets. Can’t paint the entire market with the same brush.”
Do I expect further declines in 2022? Yes, almost for sure. But there will always be certain property types that are in demand. Especially houses with income potential and some condos.
Anyway, continued rate hikes can’t completely solve today’s inflation problem. And our economy could certainly be damaged by further hikes.
December 7th, from the language used will almost certainly bring another increase.
I expected the Government to have learned from past mistakes and not jack rates too quickly, too aggressively, causing absolute pandemonium in the minds of Buyers. But who am I kidding right!? Aggressive rate hikes have removed sometimes as much as half of the buyers from communities we track.
In previous weeks, I mentioned that there were some opportunities in certain markets. Well, now opportunities exist all over the place.
Just last week, my client picked up a detached two storey within 5mins of the RedHill for under $800K. A replica of this home sold for $1.3mm in late February.
That’s a 38% drop in that particular instance.
Big enough deal for you?
So when will we recover from this? What does all of this mean to you?
I can tell you one thing with certainty – the economy moves much faster today than it did in the ’80s and ’90s. We should recover much quicker than previous recessions that took sometimes a decade to recover from.
I expect rates to come down after Q1 and probably mid to late in 2023, with some economic recovery then and into early 2024.
That means....right now, if you're looking to downsize, like I said, hold on. If you're looking to get into the market or upsize......it is and it's becoming your time, with as close to 100% certainty too, this is Big Win time. Yes, carrying costs are similar to earlier in the year when the prices were higher but that's temporary. Rates change, and they will, which will lower your carrying costs. The price you paid never changes.
So, if you can, you should do whatever you can to hold on to your real estate until things start to recover. Nobody wins if you panic sell now. Things do still have the potential to get a bit worse before they improve, but those that hold what they have (downsizers is mostly what I mean), upsize or buy/buy more will end up on top after recovering from this.
So, to quit the rambling on......here's what the numbers we're seeing are saying per area
Hamilton- While the sales of homes remained comparable to the levels that were reported in September, October sales of 455 are 40 per cent below long-term trends for the month. Overall year-to-date sales have declined by nearly 31 per cent over last year and remain below the 10- year average.
But with saying that, new listings in October did slow compared to earlier in the year but remained nearly 10 per cent higher than last year's levels. Much of the growth in new listings was driven by homes priced above $800,000, providing limited choice for those looking for more affordable and attainable options.
A couple of things such as higher rates and limited supply in lower price ranges are pushing lots of buyers out which is likely contributing to the overall pullback in demand. Even though things are shifting, conditions haven't entirely shifted to favour buyers based on traditional measures, like the months of supply or the sales to new listings ratio, prices have trended down for the 8th consecutive month. But to put things into a clearer way, since covid created such chaos let's have a look at this. This October, the benchmark price was $779,500 which is lower than previous months but it's still 16 per cent higher than levels reported at the end of 2020.
Burlington- There were easing sales in October which contributed to a year-to-date decline of nearly 27 per cent as a whole, making it the slowest level of activity since the late 1990's. While new listings this month did trend down relative to levels reported earlier in the year, so far this year, there has been a boost in new listings, albeit mainly in the higher price segment of the market.
Overall, the pullback in sales relative to new listings has also caused a gain in inventories over last year's record lows, but inventory levels still remain extremely low. Unlike some of our cities, inventory levels have improved across most price ranges. However, over 50 per cent of the inventory remains priced above $1,000,000.
For the first time since March though, benchmark prices in the region didn't trend down relative to the previous month. However, at an October price of $1,010,600, prices have still eased by 22 per cent from the February high. The benchmark prices remain over 15 per cent higher than they were at the end of 2020.
Niagara- October sales remained comparable to what we've seen over the past several months, year-to-date sales still eased by 25 per cent over last year's record highs. While the declines over last year aren't exactly a surprise, the region is still seeing sales activity consistent with longer-term trends and levels achieved prior to the pandemic.
While new listings trended down this month relative to earlier in the year, the year-to-date gain has generally supported higher inventory levels. The rising inventory levels relative to sales have caused the months of supply to trend up from the exceptionally low levels reported in the first quarter of this year.
More supply relative to demand continued to put downward pressure on prices. However, with an October benchmark price of $833,600, prices still remain well above the under $600,000 price reported in 2019.
Haldimand- October sales remained relatively stable compared to last month but were still well below levels normally reported at this time of year. The year-to-date sales in the region have eased by 14 per cent, sales are only slightly lower than longer-term averages and are consistent with activity prior to the pandemic. Still though easing sales have been met with an increase in new listings resulting in inventory gains and a boost in the months of supply.
More supply choice in the market continues to put downward pressure on prices, as the October benchmark price in the region continued to trend down compared to last month and earlier this year. As a result, the October benchmark price fell to $688,600, 19 per cent below the high reported in March of this year. However, despite the slide, prices still remain over 26 per cent higher than levels reported at the end of 2020.
So here's the dollars and cents of each city and area.